-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, D0tbsmif8myEDyhp0Nlpn2wFAh0GhGw6PNj443zvn52NLoRCmqZAHV45Sd/wNJcI KDhanSDIKBQ0GH9P/ltUVw== 0000711642-01-500104.txt : 20010801 0000711642-01-500104.hdr.sgml : 20010801 ACCESSION NUMBER: 0000711642-01-500104 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 20010630 FILED AS OF DATE: 20010731 FILER: COMPANY DATA: COMPANY CONFORMED NAME: WINTHROP GROWTH INVESTORS I LP CENTRAL INDEX KEY: 0000722565 STANDARD INDUSTRIAL CLASSIFICATION: REAL ESTATE [6500] IRS NUMBER: 042839837 STATE OF INCORPORATION: MA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10QSB SEC ACT: SEC FILE NUMBER: 000-13389 FILM NUMBER: 1694098 BUSINESS ADDRESS: STREET 1: 55 BEATTIE PLACE STREET 2: POST OFFICE BOX 1089 CITY: GREENVILLE STATE: SC ZIP: 29602 BUSINESS PHONE: 8642391000 MAIL ADDRESS: STREET 1: 55 BEATTIE PLACE STREET 2: POST OFFICE BOX 1089 CITY: GREENVILLE STATE: SC ZIP: 29602 FORMER COMPANY: FORMER CONFORMED NAME: WINTHROP INCOME PROPERTIES I LTD PARTNERSHP DATE OF NAME CHANGE: 19840124 10QSB 1 wgi.txt WGI FORM 10-QSB-QUARTERLY OR TRANSITIONAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Quarterly or Transitional Report U.S. SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 Form 10-QSB (Mark One) [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 2001 [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from _________to _________ Commission file number 2-84760 WINTHROP GROWTH INVESTORS 1 LIMITED PARTNERSHIP (Exact name of small business issuer as specified in its charter) Massachusetts 04-2839837 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 55 Beattie Place, PO Box 1089 Greenville, South Carolina 29602 (Address of principal executive offices) (864) 239-1000 (Issuer's telephone number) Check whether the issuer (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No___ PART I - FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS a) WINTHROP GROWTH INVESTORS 1 LIMITED PARTNERSHIP CONSOLIDATED BALANCE SHEET (Unaudited) (in thousands, except unit data) June 30, 2001
Assets Cash and cash equivalents $ 858 Receivables and deposits 402 Restricted escrows 159 Other assets 925 Investment properties: Land $ 2,391 Buildings and related personal property 36,559 38,950 Less accumulated depreciation (21,836) 17,114 $ 19,458 Liabilities and Partners' Deficit Liabilities Accounts payable $ 94 Tenant security deposit liabilities 149 Accrued property taxes 103 Due to affiliate 131 Other liabilities 197 Mortgage notes payable 19,784 Partners' Deficit General partners $ (970) Limited partners (23,139 units issued and outstanding) (30) (1,000) $ 19,458 See Accompanying Notes to Consolidated Financial Statements
b) WINTHROP GROWTH INVESTORS 1 LIMITED PARTNERSHIP CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) (in thousands, except per unit data)
Three Months Six Months Ended June 30, Ended June 30, 2001 2000 2001 2000 Revenues: Rental income $ 1,686 $ 1,984 $ 3,327 $ 3,835 Other income 100 98 188 182 Total revenues 1,786 2,082 3,515 4,017 Expenses: Operating 632 790 1,201 1,544 General and administrative 86 85 170 144 Depreciation 468 538 931 1,070 Interest 399 449 800 897 Property tax 99 138 197 278 Total expenses 1,684 2,000 3,299 3,933 Net income $ 102 $ 82 $ 216 $ 84 Net income allocated to general partners (10%) $ 10 $ 8 $ 22 $ 8 Net income allocated to limited partners (90%) 92 74 194 76 $ 102 $ 82 $ 216 $ 84 Net income per limited partnership unit $ 3.98 $ 3.20 $ 8.38 $ 3.28 Distributions per limited partnership unit $ 6.40 $ 37.94 $136.48 $37.94 See Accompanying Notes to Consolidated Financial Statements
c) WINTHROP GROWTH INVESTORS 1 LIMITED PARTNERSHIP CONSOLIDATED STATEMENT OF CHANGES IN PARTNERS' (DEFICIT) CAPITAL (Unaudited) (in thousands, except unit data)
Limited Partnership General Limited Units Partners Partners Total Original capital contributions 23,149 $ 2,000 $23,149 $25,149 Partners' (deficit) capital at December 31, 2000 23,139 $ (899) $ 2,934 $ 2,035 Distributions to partners -- (93) (3,158) (3,251) Net income for the six months ended June 30, 2001 -- 22 194 216 Partners' deficit at June 30, 2001 23,139 $ (970) $ (30) $(1,000) See Accompanying Notes to Consolidated Financial Statements
d) WINTHROP GROWTH INVESTORS 1 LIMITED PARTNERSHIP CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) (in thousands)
Six Months Ended June 30, 2001 2000 Cash flows from operating activities: Net income $ 216 $ 84 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation 931 1,070 Amortization of loan costs and deferred costs 39 58 Bad debt expense, net 53 117 Change in accounts: Receivables and deposits (60) (121) Other assets 60 32 Accounts payable (173) (66) Tenant security deposit liabilities (1) 6 Accrued property taxes 103 27 Due to affiliates 131 -- Other liabilities (84) (24) Net cash provided by operating activities 1,215 1,183 Cash flows from investing activities: Property improvements and replacements (337) (940) Net withdrawals from (deposits to) restricted escrows 100 (115) Net cash used in investing activities (237) (1,055) Cash flows from financing activities: Payments on mortgage notes payable (168) (147) Distributions paid to partners (3,251) (1,368) Net cash used in financing activities (3,419) (1,515) Net decrease in cash and cash equivalents (2,441) (1,387) Cash and cash equivalents at beginning of period 3,299 1,889 Cash and cash equivalents at end of period $ 858 $ 502 Supplemental disclosure of cash flow information: Cash paid for interest $ 741 $ 865 At June 30, 2000, accounts payable and property improvements and replacements were adjusted by approximately $457,000 for non-cash activity. See Accompanying Notes to Consolidated Financial Statements
e) WINTHROP GROWTH INVESTORS 1 LIMITED PARTNERSHIP NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) Note A - Basis of Presentation The accompanying unaudited consolidated financial statements of Winthrop Growth Investors 1 Limited Partnership (the "Partnership" or "Registrant") have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-QSB and Item 310(b) of Regulation S-B. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. The general partner of the Partnership is Two Winthrop Properties, Inc. (the "Managing General Partner"), an affiliate of Apartment Investment and Management Company ("AIMCO"), a publicly traded real estate investment trust. In the opinion of the Managing General Partner, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the three and six month periods ended June 30, 2001 are not necessarily indicative of the results that may be expected for the fiscal year ending December 31, 2001. For further information, refer to the consolidated financial statements and footnotes thereto included in the Partnership's Annual Report on Form 10-KSB for the fiscal year ended December 31, 2000. Principles of Consolidation The consolidated statements of the Partnership include its 99%, 99.9%, and 99.98% general partnership interests in DEK Associates, Meadow Wood Associates, and Stratford Place Investors Limited Partnership, respectively. Additionally, the Partnership is the 100% beneficiary of the Stratford Village Realty Trust. All significant interpartnership balances have been eliminated. Segment Reporting Statement of Financial Standards ("SFAS") No. 131, Disclosure about Segments of an Enterprise and Related Information established standards for the way that public business enterprises report information about operating segments in annual financial statements and required that those enterprises report selected information about operating segments in interim financial reports. It also established standards for related disclosures about products and services, geographic areas, and major customers. As defined in SFAS No. 131, the Partnership has only one reportable segment. The Managing General Partner believes that segment-based disclosures will not result in a more meaningful presentation than the consolidated financial statements as currently presented. Reclassification Certain reclassifications have been made to the 2000 balances to conform to the 2001 presentation. Note B - Transactions with Affiliated Parties The Partnership has no employees and is dependent on the Managing General Partner and its affiliates for the management and administration of all Partnership activities. The Partnership Agreement provides for certain payments to affiliates for services and as reimbursement of certain expenses incurred by affiliates on behalf of the Partnership. The following payments were paid or accrued to the Managing General Partner and its affiliates during the six months ended June 30, 2001 and 2000: 2001 2000 (in thousands) Property management fees (included in operating expenses) $173 $201 Reimbursement for services of affiliates (included in investment properties, operating expense and general and administrative expenses) 125 80 During the six months ended June 30, 2001 and 2000, affiliates of the Managing General Partner were entitled to receive 5% of gross receipts from all of the Partnership's properties as compensation for providing property management services. The Partnership paid to such affiliates approximately $173,000 and $201,000 during the six months ended June 30, 2001 and 2000, respectively. An affiliate of the Managing General Partner received reimbursements of accountable administrative expenses amounting to approximately $125,000 and $80,000 for the six months ended June 30, 2001 and 2000, respectively. During the six months ended June 30, 2001, an affiliate of the Managing General Partner loaned the Partnership approximately $131,000, including interest. The amount was repaid subsequent to June 30, 2001. In addition to its indirect ownership of the general partner interest in the Partnership, AIMCO and its affiliates owned 9,099.25 limited partnership units in the Partnership representing 39.32% of the outstanding units at June 30, 2001. A number of these units were acquired pursuant to tender offers made by AIMCO or its affiliates. It is possible that AIMCO or its affiliates will acquire additional limited partnership interests in the Partnership for cash or in exchange for units in the operating partnership of AIMCO either through private purchases or tender offers. Under the Partnership Agreement, unitholders holding a majority of the Units are entitled to take action with respect to a variety of matters, which would include without limitation, voting on certain amendments to the Partnership Agreement and voting to remove the Managing General Partner. When voting on matters, AIMCO would in all likelihood vote the Units it acquired in a manner favorable to the interest of the Managing General Partner because of its affiliation with the Managing General Partner. Note C - Supplementary Information Required Pursuant to Section 9.4 of the Partnership Agreement Statement of cash available for distribution for the three and six months ended June 30, 2001 (in thousands): Three Months Ended Six Months Ended June 30, 2001 June 30, 2001 Net Income $ 102 $ 216 Add: Amortization expense 19 39 Depreciation expense 468 931 Less: Cash (to reserves) released from reserves (426) 75 Cash available for distribution $ 163 $1,261 Distributions allocated to Limited Partners $ 147 $1,168 General Partners' interest in cash available for distribution $ 16 $ 93 Note D - Distributions During the six months ended June 30, 2001, the Partnership paid distributions to the partners of approximately $3,251,000 (approximately $3,158,000 to the limited partners or $136.48 per limited partnership unit). These distributions consisted of approximately $1,893,000 (approximately $81.81 per limited partnership unit) all to the limited partners from the refinancing proceeds of Ashton Ridge Apartments and approximately $97,000 all to the limited partners ($4.18 per limited partnership unit) from the remaining sale proceeds of Sunflower Apartments. The distributions also consisted of approximately $1,261,000 (approximately $1,168,000 to the limited partners or $50.49 per limited partnership unit) from operations of the Partnership's remaining investment properties. During the six months ended June 30, 2000, the Partnership paid a distribution to the limited partners from operations of approximately $490,000 ($21.18 per limited partnership unit) which had been declared and accrued at December 31, 1999. In addition, the Partnership declared and paid cash distributions to the limited partners from operations of approximately $878,000 ($37.94 per limited partnership unit) during the six months ended June 30, 2000. Note E - Change in Accounting Estimate During the six months ended June 30, 2001, certain accruals of approximately $103,000 established related to the sale of Sunflower Apartments in December 2000 were reversed due to actual costs being less than anticipated. This accrual reversal is included as a reduction of operating expenses in the six month period ended June 30, 2001. Note F - Legal Proceedings The Partnership is unaware of any pending or outstanding litigation that is not of a routine nature arising in the ordinary course of business. ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION The matters discussed in this Form 10-QSB contain certain forward-looking statements and involve risks and uncertainties (including changing market conditions, competitive and regulatory matters, etc.) detailed in the disclosures contained in this Form 10-QSB and the other filings with the Securities and Exchange Commission made by the Partnership from time to time. The discussion of the Partnership's business and results of operations, including forward-looking statements pertaining to such matters, does not take into account the effects of any changes to the Partnership's business and results of operations. Accordingly, actual results could differ materially from those projected in the forward-looking statements as a result of a number of factors, including those identified herein. The Partnership's investment properties consist of three apartment complexes. The following table sets forth the average occupancy of the properties for the six months ended June 30, 2001 and 2000: Average Occupancy 2001 2000 Ashton Ridge Apartments Jacksonville, Florida 96% 94% Stratford Place Apartments Gaithersburg, Maryland 97% 98% Stratford Village Apartments Montgomery, Alabama 91% 92% Results of Operations The Partnership reported net income of approximately $216,000 for the six months ended June 30, 2001 as compared to net income of approximately $84,000 for the six months ended June 30, 2000. The Partnership reported net income of approximately $102,000 for the three months ended June 30, 2001 as compared to approximately $82,000 for the three months ended June 30, 2000. The increase in net income for the three and six month periods is due to decreased total expenses which was partially offset by a decrease in total revenues as a result of the sale of Sunflower Apartments in December 2000. Excluding the impact of the reversal of $103,000 in accruals related to the sale of Sunflower Apartments for the six months ended June 30, 2001 and the impact of the operations of Sunflower Apartments for the three and six months ended June 30, 2000, the Partnership's net income for the three and six months ended June 30, 2001 was approximately $102,000 and $113,000 as compared to a net income (loss) of approximately $19,000 and $(30,000) for the three and six months ended June 30, 2000. The increase in net income for the three and six months ended June 30, 2001 is primarily attributable to an increase in total revenues which was partially offset by an increase in total expenses. The increase in total revenues for the comparable periods is due to an increase in rental income and other income. Rental income increased as a result of an increase in average rental rates at Ashton Ridge Apartments and Stratford Place Apartments and an increase in occupancy at Ashton Ridge Apartments. Other income increased primarily due to an increase in interest income as a result of higher average cash balances held in interest bearing accounts and an increase in utilities reimbursements at Ashton Ridge Apartments and Stratford Place Apartments. Excluding the impact of the operations of Sunflower Apartments, total expenses for the three and six month periods ended June 30, 2001 increased due primarily to an increase in operating, depreciation, and general and administrative expenses as compared to the three and six months ended June 30, 2000. Operating expense increased for the six months ended June 30, 2001 due to an increase in property and administrative expenses. Property expense increased for the six month period due primarily to increases in utility charges by the various service providers and due to an increase in employee salaries and related benefits and the use of credit collection and eviction services at Ashton Ridge Apartments and an increase in business license expense at Stratford Place Apartments. Operating expense increased for the three months ended June 30, 2001 as a result of an increase in maintenance expense. Maintenance expense increased as a result of an increase in the use of contract labor for painting, cleaning, and other building improvements at the Partnership's investment properties. Depreciation expense increased for both periods due to property improvements and replacements placed in service during the last twelve months which are now being depreciated. General and administrative expenses increased for the three and six months ended June 30, 2001 due to increased general partner reimbursements allowed under the Partnership agreement and an increase in professional fees. Also included in general and administrative expenses are costs associated with the quarterly and annual communications with investors and regulatory agencies. As part of the ongoing business plan of the Partnership, the Managing General Partner monitors the rental market environment of its investment properties to assess the feasibility of increasing rents, maintaining or increasing occupancy levels and protecting the Partnership from increases in expense. As part of this plan, the Managing General Partner attempts to protect the Partnership from the burden of inflation-related increases in expenses by increasing rents and maintaining a high overall occupancy level. However, due to changing market conditions, which can result in the use of rental concessions and rental reductions to offset softening market conditions, there is no guarantee that the Managing General Partner will be able to sustain such a plan. Liquidity and Capital Resources At June 30, 2001, the Partnership had cash and cash equivalents of approximately $858,000 compared to approximately $502,000 at June 30, 2000. The decrease in cash and cash equivalents for the six months ended June 30, 2001 from the Partnership's year ended December 31, 2000 was approximately $2,441,000. This decrease is due to approximately $3,419,000 of cash used in financing activities and approximately $237,000 of cash used in investing activities partially offset by approximately $1,215,000 of cash provided by operating activities. Cash used in financing activities consisted primarily of distributions paid to the partners and, to a lesser extent, principal payments made on the mortgages encumbering the Partnership's investment properties. Cash used in investing activities consisted of property improvements and replacements partially offset by net withdrawals from restricted escrows maintained by the mortgage lenders. The Partnership invests its working capital reserves in interest bearing accounts. The sufficiency of existing liquid assets to meet future liquidity and capital expenditure requirements is directly related to the level of capital expenditures required at the properties to adequately maintain the physical assets and other operating needs of the Partnership and to comply with Federal, state and local legal and regulatory requirements. Capital improvements planned for each of the Partnership's properties are detailed below. Ashton Ridge Apartments During the six months ended June 30, 2001, the Partnership spent approximately $156,000 for capital improvements consisting primarily of floor covering and appliance replacements, plumbing improvements, roof replacements, the installation of a sprinkler system, and air conditioning unit replacements. These improvements were funded from operating cash flow and replacement reserves. Approximately $316,000 has been budgeted for capital improvements during the year 2001 at Ashton Ridge Apartments consisting primarily of floor covering and appliance replacements, installation of a sprinkler system, plumbing improvements, and air conditioning unit replacement. Additional improvements may be considered and will depend on the physical condition of the property as well as replacement reserves and anticipated cash flow generated by the property. Stratford Place Apartments During the six months ended June 30, 2001, the Partnership spent approximately $120,000 for capital improvements consisting primarily of plumbing enhancements, floor covering and appliance replacements, other building improvements, and lighting upgrades. These improvements were funded from Partnership reserves and operating cash flow. Approximately $96,000 has been budgeted, but is not limited to, for capital improvements during the year 2001 at Stratford Place Apartments consisting primarily of floor covering replacements, water heater replacements, air conditioning unit replacements, and appliance replacements. Additional improvements may be considered and will depend on the physical condition of the property as well as replacement reserves and anticipated cash flow generated by the property. Stratford Village Apartments During the six months ended June 30, 2001, the Partnership spent approximately $61,000 for capital improvements consisting primarily of floor covering and appliance replacements, air conditioning improvements, and interior decorations. These improvements were funded from operating cash flow. Approximately $66,000 has been budgeted for capital improvements during the year 2001 at Stratford Village Apartments consisting primarily of air conditioning unit replacements, floor covering and appliance replacements, and plumbing enhancements. Additional improvements may be considered and will depend on the physical condition of the property as well as replacement reserves and anticipated cash flow generated by the property. The additional capital expenditures will be incurred only if cash is available from operations or from Partnership reserves. To the extent that such budgeted capital improvements are completed, the Partnership's distributable cash flow, if any, may be adversely affected at least in the short term. The Partnership's current assets are thought to be sufficient for any near-term needs (exclusive of capital improvements) of the Partnership. The mortgage indebtedness of approximately $19,784,000 has maturity dates ranging from July 2006 to November 2024 at which time the mortgages will be fully amortized. During the six months ended June 30, 2001 , the Partnership paid distributions to the partners of approximately $3,251,000 (approximately $3,158,000 to the limited partners or $136.48 per limited partnership unit). These distributions consisted of approximately $1,893,000 (approximately $81.81 per limited partnership unit) all to the limited partners from the refinancing proceeds of Ashton Ridge Apartments and approximately $97,000 all to the limited partners ($4.18 per limited partnership unit) from the remaining sale proceeds of Sunflower Apartments. The distributions also consisted of approximately $1,261,000 (approximately $1,168,000 to the limited partners or $50.49 per limited partnership unit) from operations of the Partnership's remaining investment properties. During the six months ended June 30, 2000, the Partnership paid a distribution to the limited partners from operations of approximately $490,000 ($21.18 per limited partnership unit) which had been declared and accrued at December 31, 1999. In addition, the Partnership declared and paid cash distributions to the limited partners from operations of approximately $878,000 ($37.94 per limited partnership unit) during the six months ended June 30, 2000. The Partnership's distribution policy is reviewed on a monthly basis. Future cash distributions will depend on the levels of net cash generated from operations, the availability of cash reserves, and the timing of debt maturities, refinancings and/or property sales. There can be no assurance, however, that the Partnership will generate sufficient funds from operations, after required capital expenditures, to permit additional distributions to its partners during the remainder of 2001 or subsequent periods. In addition to its indirect ownership of the general partner interest in the Partnership, AIMCO and its affiliates owned 9,099.25 limited partnership units in the Partnership representing 39.32% of the outstanding units at June 30, 2001. A number of these units were acquired pursuant to tender offers made by AIMCO or its affiliates. It is possible that AIMCO or its affiliates will acquire additional limited partnership interests in the Partnership for cash or in exchange for units in the operating partnership of AIMCO either through private purchases or tender offers. Under the Partnership Agreement, unitholders holding a majority of the Units are entitled to take action with respect to a variety of matters, which would include without limitation, voting on certain amendments to the Partnership Agreement and voting to remove the Managing General Partner. When voting on matters, AIMCO would in all likelihood vote the Units it acquired in a manner favorable to the interest of the Managing General Partner because of its affiliation with the Managing General Partner. PART II - OTHER INFORMATION ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K a) Exhibits: None. b) Reports on Form 8-K filed during the quarter ended June 30, 2001: Current Report on Form 8-K dated July 13, 2001 and filed on July 2001, disclosing the dismissal of Arthur Andersen LLP as the Registrant's certifying accountant and the appointment of Ernst and Young LLP as the certifying accountant for the year ended December 31, 2001. SIGNATURES In accordance with the requirements of the Exchange Act, the Registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. WINTHROP GROWTH INVESTORS 1 LIMITED PARTNERSHIP By: Two Winthrop Properties, Inc. Managing General Partner By: /s/Patrick J. Foye Patrick J. Foye Vice President - Residential By: /s/Martha L. Long Martha L. Long Vice President and Controller - Residential Date: July 31, 2001 -----END PRIVACY-ENHANCED MESSAGE-----